Over June and July of this year, Marketing Masters students at the University of Bath worked in partnership with Qubit to research key areas of personalization in ecommerce, specifically the fashion and luxury industries.

At the end of their project, the Qubit team got to meet the students at the London office and hear their findings. Here are some of the key takeaways from the day.

Fashion ecommerce is a growing industry

The first group to present gave us an insight into the current state of fashion ecommerce: “Fashion ecommerce accounts for 27% of the total ecommerce market, with a 16.5% growth in the UK last year.”

What accounts for this growth rate? “The increase in innovative technologies enables customers to explore fashion ecommerce and other websites with ease. Millennials also account for the largest group of casual buyers, and online is their preferred method of shopping.”

What are the main issues in fashion ecommerce?

The students found that the key to success in fashion ecommerce is to keep customers coming back to shop with you. However, 44% of fashion brands focus more on customer acquisition, while only 18% value customer retention.

“Since customer acquisition can cost 5 to 25 times more than retaining existing customers, and 80% of online revenue comes from loyal customers, it’s important to have a retention strategy in place. But a fragmented market and heavy competition in the fashion space means that retention is harder than ever.”

Personalization as a solution in fashion

The best way to overcome these challenges within fashion is to improve the customer experience with personalization. The presenters found that leveraging loyalty programs was an effective solution in retaining customers:

“Deploy an engaging rewards experience that is available over multiple channels. Members can start receiving personalized offers, prices, and discounts from the day they sign up.”

Relevant and personalized product recommendations also came up as a solution to industry challenges in fashion: “By anticipating consumer needs in advance, you can increase your loyal customer base. Combine experiences by triggering personalized recommendations via email when basket abandonment takes place, as targeted emails can lead to customer reactivation and an increase in conversion rates.”

Luxury ecommerce and the challenges for luxury retailers

The next group began by stating that, much like fashion ecommerce, luxury is growing online; an influx of millennial and Gen Z customers are responsible for 85% of growth in the industry over the next 5 years.

“Younger generations grew up with technology, which means they’d be incredibly tech-savvy. A study found that 95% of this group have at least one smartphone or tablet to hand”

However, luxury poses its own set of challenges. Luxury brands need to maintain their exclusivity, which is why some companies are apprehensive about having an ecommerce space. Conversion rates online are also low, as a third of luxury shoppers only use online channels to research.

“There is also a concern about the luxury experience when shopping online. Luxury customers expect a premium service in-store with personal shoppers, being able to feel the quality of products and try items on. Having an ecommerce store can take away from this, and can ‘trivialize’ a premium product.”

Solving luxury challenges with personalization

Luxury brands can use personalization to recreate this in-store experience and get more customers over the line to conversion.

The group agreed that omnichannel personalization: “by combining on and offline sources of data, you can remember customers based on previous purchases, and use it to tailor experiences to them."

Combining this with web page personalization based on segmentation could boost revenue. By surfacing specific content based on segment - for example, first time visitors or VIP customers - luxury brands can foster relationships with their customer base.

"The 20% of a brand's consumer base that can be classified as VIPs generate over 40% of revenue so, in order to retain these customers, they should strive to remember them and offer content relevant to them, as well as access to exclusive events (such as shows at fashion week) or early access to limited edition items."

Both groups of students gave informative and insightful presentations about their areas of ecommerce and showed a real understanding of how building a personalization program can aid brands within these verticals. Qubit will continue to work with Bath University on ongoing research projects, and hope to give students insight.


Sophie Hibbert

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